What happened, say some current and former Republican leaders, is that the national party moved away from the issues of fiscal conservatism, small government and lower taxes. As the base of the party shifted to the South and West, social conservatives and evangelicals moved to the forefront, and issues such as abortion, school prayer and gay marriage took primacy on the national party’s agenda — in the process turning off more moderate voters in this part of the country.

“I’m a Northeasterner. I grew up in New York City,” said Christopher Healy, chairman of the Connecticut Republican Party. “The evangelical members of the party have their issues, and their issues are important to them.” But here, he said, “the Northeastern brand of Republican philosophy . . . is based on smaller government and less taxes. We’re not interested in what’s going on in the bedroom.”

Former senator Lincoln Chafee of Rhode Island was the epitome of the moderate-to-liberal northeastern Republican — strongly pro-choice on abortion, a supporter of gay marriage and stem cell research, an opponent of the war in Iraq. As a fiscal conservative, Chafee opposed President Bush’s tax cuts.

The problem is that too many people have gotten locked into two notions peddled by the Democrats and their media allies: that balancing the budget is the be-all and end-all of “fiscal conservatism,” and that spending cuts are impossible, so the only way to ever balance the budget is to raise taxes – and then, when spending keeps rising, raise them again. The WaPo, typically, simply assumes these premises.

No wonder voters who want lower taxes abandoned these people. And maybe if they’d made a concerted effort to beat back overspending, they’d have been listened to. It is a fair criticism of Bush and the GOP Congress that they failed to restrain federal spending, and even added a new and hugely costly entitlement by adding prescription drug coverage to Medicare. But where were the Northeastern “fiscal conservatives” when the spending battles were going unfought? Where were they when the GOP nominated a genuine spending hawk for President in John McCain and he couldn’t even win New Hampshire? In fact, studies have repeatedly shown that the best spending records in the GOP come from people like Tom Coburn and Jim DeMint who are also rock-ribbed social conservatives. (Cato, for example, gives Carcieri the best fiscal report card of any Republican Governor in the Northeast). The social liberals in the party, with precious few exceptions, haven’t held up their end of the deal.

Consider two candidates. Candidate A promises that he’ll spend 15 cents for every dollar you make, and tax you 12; he’ll make up the difference by issuing Treasury bills. Candidate B promises you a balanced budget…he’ll spend 22 cents of every dollar and tax you 22. If your interest is in smaller government and lower taxes, how can you favor Candidate B? How can you call Candidate B the “fiscal conservative” if you intend that term to have any meaning whatsoever?

I suppose if you play with the numbers long enough you can argue that excessive federal deficit financing leads to runaway growth in interest expenditures, but in the real world the federal government has the world’s lowest borrowing rate and has rarely been close to as heavily leveraged (in terms of debt service as a percentage of annual expenditures) as the kinds of corporations that get themselves in serious trouble with too much debt. Some debt is healthy. And even if you are concerned about deficits, the cure is certainly not to let spending run free and just keep jacking up taxes; it’s to bring spending in line with tax revenues. That’s what living within your means is really about.

The key to winning back voters disenchanted with the GOP as a steward of taxpayer funds is spending and the size of government; show we can cut those, and broader support will follow. I don’t agree with all of P.J. O’Rourke’s diagnoses but he’s surely right that the GOP lost credibility by failing to deliver tangible progress in shrinking the federal footprint. The opportunity for the GOP’s revival will come from the fact that the whole federal government is now in the hands of people who intend to expand that footprint like there’s no tomorrow. Sarah Palin gets this, as several Republican Governors do, but of course, she and other GOP Governors who grasp the theory now have to go back and prove they can pare back their own state budgets in tough economic times. Because at the end of the day, holding the line on spending is the real test of fiscal conservatism.